That means a year or more of tough times for all of us. The sad reality is more of us will be looking for work in the next 12 months. And for those with jobs, it’s not going to be so pleasant either. When times get tough, people feel stressed out, frazzled and nervous.

That’s not unreasonable. When people are faced with a combination of resource limits, personal insecurity and demands for productivity, emotions run high.

There are no easy jobs left. Those of us lucky enough to be employed have stressful jobs now.

For managers, this represents a significant challenge.

Stressed-out knowledge workers do not perform at their best. Just when we need people to focus and produce, they are distracted by the ugly reality outside.

You really can’t expect people who are worried about their personal financial security to completely shut out those thoughts in order to concentrate on their work.

But knowledge work requires exactly that sort of composure.

To a degree, distraction is unavoidable. But as managers, we need to do our best to help people stay on track and do that which is completely unnatural: keep their eyes off their fears and on their work.

Doing this requires careful thinking about the emotional state of the staff. Now more than ever, we need to realize that we are not managers of stuff, but of people who do stuff.

We don’t manage tasks; we manage the people who do those tasks. And people have emotions that affect their performance.

The most important emotional state to pay attention to right now is panic. We have to help keep stressed-out staffers from becoming a panicked mob.

Stress may be unavoidable, but panic is not.

As a consultant, I’ve seen lots of organizations and project teams under pressure.

Some have been composed and focused; some, stressed out; and others, panicked.

What’s interesting is that the facts surrounding their work are often similar.

They are all under time and resource constraints, and many are facing the same personal insecurity. But they respond differently.

I’ve noticed that one of the key differences is in how the managers of these groups respond to those facts.

Managers who deny reality generally don’t fare too well. Telling people, “There’s no problem here; what are you worried about?” usually convinces the staff that you are either an idiot or a liar. Neither is a useful image.

Managers who try to tell their people what they should or shouldn’t feel about reality generally don’t fare well either. Telling people “You shouldn’t worry about this” usually gets them worrying.

Managers who panic themselves are the most likely to induce panic in their people.

The teams that do the best seem to be those whose managers openly acknowledge reality and meet it with determination rather than trepidation. And how you respond is more important than anything you say.

When you establish a common frame for reality and convince everyone that you see the same challenges they do but are willing to take them on, you demonstrate the best response.

Having done that, you need to focus attention on the things you can control – on the activities that will give the best chance for success.

If those around you see the possibility of a better future and feel that they have the power to be part of creating it, they are most likely going to respond well, no matter how challenging reality may be.